Sunday, June 10, 2012

Urbanization and Economic Development

Next week, I'll be in Budapest participating in this GDN Network Conference titled "Urbanization and Development: Delving Deeper into the Nexus". I will take an indirect route back to LA as I will also make my debut in Singapore to see my friends at NUS. My co-author Yongheng Deng has invited me to a great conference and I'm hoping to become a regular visitor to Singapore.

What are the "big questions" for urban economists to study in developing nations? My own recent work has focused on China. In a series of papers, such as this one , this one , this one and this one , I have worked with my co-authors to create new data sets to test classic urban economics questions in a developing country city. For example, we have used within city and across city variation in real estate prices to tease out how much households value environmental amenities such as clean air, access to parks and access to public transit. The big research questions here focus on measuring whether willingness to pay for non-market environmental goods increases sharply as a nation grows richer. On the supply side, I'm quite interested in whether governments at the national and urban level bother to deliver high quality public goods as the nation grows richer.

The challenge here is how one convincingly answers these questions. The randomized control trial methodology does not appear to be easily implemented here. In general, I do not think that there have been enough field experiments run in cities in LDCs focused on the demand and supply for local public goods. For example, I could imagine in a city such as Bangkok giving households chosen at random a "relocation voucher" that would provide them with 12 months free rent if they move. A researcher could study the attributes of the new apartment and neighborhood they move to --- this would yield a revealed preference test of what location attributes they value the most. The population could be surveyed to see where they work and where their friends live.